Five years of expanding access to retirement security

Last month, Common Wealth marked its fifth anniversary. We thought this would be a good time to reflect on the past five years and share some of what we’ve learned about tackling the retirement security challenge through a mission-driven, entrepreneurial company.

We started the business not with a product in mind, but with a problem: how to help the growing number of people without workplace pensions build income in retirement. This problem is arguably even more pressing in 2020 than it was in 2015. Workplace retirement plan coverage has continued to decline, and the underlying trends driving that decline — the rise of contingent work, shortening corporate lifespans, the weakening of organized labour — persist.

COVID-19 will make things worse. As we have written elsewhere, the pandemic is not only a public health crisis. It is a crisis of household financial security, threatening to further weaken household balance sheets, deplete already-meagre savings, and deepen wealth inequality.

We are more motivated than ever to tackle this problem.

The problem is also an opportunity. Our research, including an in-depth study we conducted with the Healthcare of Ontario Pension Plan (HOOPP) and the National Institute on Ageing, has found that participation in a good workplace retirement plan can result in hundreds of thousands or even well over a million dollars more in retirement income — for the same level of savings.

When we looked at those numbers, we knew we had to do something about it. Think about it: where else in life do you have the opportunity to create hundreds of thousands of dollars of additional wealth and materially improve quality of life for people?

We felt we had an obligation to get as many people as possible participating in cost-effective retirement plans.

We’ve learned that we can’t afford to wait for government or the traditional financial services industry to solve the problem. Apart from the modest enhancement to the Canada Pension Plan, the past five years have brought little change from either of these quarters:

• Canada’s investment fees remain among the world’s highest
• Most Canadian savers do not enjoy fiduciary protection in their retirement arrangements
• Despite much talk about “the decumulation problem,” most Canadian retirees are left on their own to turn their nest eggs into predictable, secure retirement income
• Most Canadians do not have access to financial advice that puts their interest first
• Despite much talk about ETFs and robo-advice, the vast majority of Canadian retail investors continue to use actively managed, high-cost mutual funds
• Modest-income savers continue to be pushed into high-fee RRSPs, which can result in less net income than they saved in the first place

We felt we had to create our own solution based on the evidence of what actually works. We’ve combined the key things that drive value in a retirement arrangement and integrated them into a single, easy-to-use, digitally-driven retirement plan. We’ve built our own cloud-based retirement planning and recordkeeping technology that is driven by evidence-based algorithms and that can be configured and white-labelled to meet the unique needs of each plan sponsor. We provide professional services to plan members and sponsors to drive better retirement outcomes. We’ve partnered with world-class firms like Vanguard and Brookfield Annuity to integrate high-quality investment and guaranteed lifetime income solutions into our technology platform.

We’ve tried to make it as easy as possible to put Canadians on a path towards considerably more money in retirement. In 30 minutes or less, we can set you up with an automated retirement plan that could earn a typical household $1 million or more during their golden years.

Our plan sponsor partners have played a critical role as leaders and collaborators. Their keen understanding of their members’ needs and dedication to putting their members’ interests first have pushed our thinking and led to many innovations in plan design. The partnerships extend to working together on delivery, member engagement, plan growth, and continuous improvement of the plans we manage. We are fortunate to have had the chance to work with some of the country’s largest professional associations and labour unions — organizations like the Ontario Medical Association, Unifor, and SEIU Healthcare — and in so doing, advance retirement security for a wide variety of workers ranging from physicians to personal support workers to those who work in the manufacturing sector. These partnerships have affirmed our early thesis that these organizations are well positioned to innovate and tackle the retirement security challenge in the 21st century.

The breadth of our partnerships has been a hallmark of the past five years. We’ve worked with some of Canada’s — and the world’s — top pension funds, including documenting the lessons for the world-renowned “Canada model” of pension in a World Bank report now being used by governments and pension managers around the globe. We’ve helped governments at home and abroad improve retirement systems and public pensions. We’ve worked with some of Canada’s top foundations, charities, not-for-profit leaders, and anti-poverty advocates on how to improve financial security for lower-income workers.

“It’s all about the people” has been a common refrain in our (virtual) office lately. So much of the success, so much of the joy and privilege of building something new, comes down to the chance to work with remarkable individuals, working together towards a common purpose.

Bill Foster and Jennifer Brown, two of Canada’s top pension administrators, became early members of our team, bringing with them decades of experience and practical wisdom organizations like Ontario Teachers’, OMERS, and OPTrust. Bill and Jennifer were joined by a group of “nimble generalists,” starting with Connor Bays, and followed by Janette Luu, Joan Milway, Grace Li, and Jaymin Kim, who together have tackled problems ranging from product, sales, research, marketing, strategy, and more.

More recently, we’ve gotten more specialized, adding a top-flight technology team, whose first three members, Jodi Moran, Fil Zalewski, and Thomas Varghese, have each led large technology teams in the past, and are building a team of talented technologists, including our most recent technology hire, Denis Bukharov. Richard Duemmel, an operations leader with 30 years of pension experience at OMERS, has recently joined our operations team. And — speaking of people — our latest hire, Nora Beatty, is leading our people function while helping us bring high-quality retirement plans to more workplaces.

We’ve been lucky to team up with some giants of the retirement world. We worked closely with Jim Keohane, the recently-retired CEO and former CIO of HOOPP during the period when that fund delivered world-leading investment returns, on research to quantify the value of a good retirement plan. Keith Ambachtsheer, who’s been recognized as the world’s #1 knowledge broker in institutional investing, and Ed Waitzer, former Ontario Securities Commission chair, have provided expert advice to guide the Common Good initiative. We’ve created a retirement education podcast, Life Two, with globally recognized author and retirement expert Don Ezra. We have also benefited from the support and guidance of Common Wealth advisory board members Murray Gold, Harry Arthurs, and Michael Nobrega, each of whom are well recognized and regarded as leaders in various elements of the pension industry.

We’ve also had the privilege of working with and enjoying the support of amazing people from outside the retirement domain. The Common Good Steering Committee, ably chaired by Maytree cofounder Alan Broadbent, and including not-for-profit leaders Liz Mulholland (Prosper Canada), Rahima Mamdani (United Way Greater Toronto), and Owen Charters (Boys and Girls Clubs of Canada), has shown tremendous leadership in promoting retirement security for modest-income Canadians.

The past five years have reaffirmed the value of focus. We are a retirement company. We have no desire to become a bank. You won’t see us offering you a mortgage, a life insurance policy, a credit card, or a trading platform for individual stocks. The global retirement gap is $70 trillion. That’s a plenty big enough problem for us.

Solving the retirement challenge is a marathon, not a sprint. This requires us to build a durable, sustainable organization that will last for a long time. It requires long-term partnerships with plan sponsors and investment partners, and long-term relationships with plan members where we work together to help them stick to the right set of behaviours. It means resisting knee-jerk short-termism and looking towards the horizon, persisting in our focus on a problem that many consider too far off to worry about.

What might the next five years look like? Over the past several months, we’ve continued to work on improving our offering and expanding our impact. We’re very excited about what lies ahead and about the difference we can make in people’s lives and grateful for the support we have enjoyed and continue to enjoy from many remarkable people who have made this possible.